Way to go, unions.

[briefcase]

Hostess, maker of Twinkies and Ding Dongs, says closing business
Hostess Brands, baker of iconic Twinkies cakes, said Friday it asked a court's permission to shut down the entire company after a strike crippled its operations.

The move shuts down one of the nation's oldest and largest producers of baked goods. Founded in 1930, it produces such well-known brands, aside from Twinkies, as Ding-Dongs, Ho Ho's, Sno Balls and Donettes, not to mention Wonder bread, which the company says is the best-selling white bread in the United States.

In a statement, Hostess said its bakery operations have been suspended at all plants and that it would lay off most of its 18,500 workers to focus on selling its assets. It said it has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including 33 bakeries and 565 distribution centers.

The company said it would continue to deliver products and its stores would remain open for several days to sell already-baked products.

"The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the company's largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the company's ability to produce and deliver products at multiple facilities," Hostess said in the statement.

Source: http://www.nbcnews.com/business/hostess-maker-twinkies-ding-dongs-says-closing-business-1C7112898


Bravo, unions, bravo. 

Keep in mind that Obama met this week with both union leaders and CEOs this week; however, the union leaders got priority and the CEOs were primarily there to talk about the looming 'fiscal cliff'.

Do we want to start a betting pool for what the November employment or unemployment numbers are going to look like? 

[kbvette]

                 Mother Nature......just laid off hundreds if not thousands of workers in the New England area.....I suspect that might
 impact the jobs numbers also.Good news is people will be put back to work rebuilding the impacted area. As far as Hostess is
 concerned, I believe there were other issues involving plant closures......bankruptcy?

[briefcase]

                 Mother Nature......just laid off hundreds if not thousands of workers in the New England area.....I suspect that might
 impact the jobs numbers also.Good news is people will be put back to work rebuilding the impacted area. As far as Hostess is
 concerned, I believe there were other issues involving plant closures......bankruptcy?

Sandy might be a wash (unintentional humor, there) or a small net gain or loss as far as jobs for the reason you state, that the rebuilding has started.

And, yes, Hostess Brands was in bankruptcy. Why?

Hostess Brands Inc. filed for Chapter 11 bankruptcy protection Wednesday to confront burdensome debt and labor costs that the Twinkies and Wonder Bread baker says have left it fighting to compete.

The privately held Irving, Texas, company's move marks the second significant court restructuring in the past several years. In a statement, Hostess said the current cost structure "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." It said it would be able to maintain operations thanks to a $75 million financing commitment from a group of lenders.

In bankruptcy, Hostess said it plans to continue negotiating with 12 unions to modify the collective-bargaining agreements governing the employment of its union workers, who comprise 83% of its approximately 19,000 employees.

"Whether the debtors can achieve long-term viability depends directly and substantially on the debtors' ability to achieve dramatic change to their labor agreements, with a corresponding material reduction in their cost structure and legacy pension and medical obligations, and a restructuring of their capital structure," Hostess said in court papers. "That is the purpose and the focus of these Chapter 11 cases."

Source: http://online.wsj.com/article/SB10001424052970204257504577154402317896574.html


So, the union workers negotiated themselves right out of jobs. If anyone wonders why organized labor doesn't exert the same influence and power it enjoyed 50-60 years ago, here's a perfect case study. Before the development of the global marketplace, you could extract outrageous wages or stipulations on duties for a particular job, but those days are long since gone. Only in something like the government-backed bankruptcy of GM could you have unions keep their sweetheart deals while John Q. Public stockholder was left with nothing but worthless paper. 

[dug]

My take is, just like with the automakers, there is blame on both sides of equation.  When times were good the union wanted stuff and management wanted to keep product going out the door so they agreed.  Times change and in a more competitive environment those promises can't be kept so bankruptcy was going to happen eventually regardless. 

Still, someone will buy the rights to those products and keep producing them, and will do so at a lower cost so while it sucks for the employees it will be good for anyone that likes Twinkies or Ding Dongs.   

[briefcase]

My take is, just like with the automakers, there is blame on both sides of equation.  When times were good the union wanted stuff and management wanted to keep product going out the door so they agreed.  Times change and in a more competitive environment those promises can't be kept so bankruptcy was going to happen eventually regardless. 

Still, someone will buy the rights to those products and keep producing them, and will do so at a lower cost so while it sucks for the employees it will be good for anyone that likes Twinkies or Ding Dongs.

This is true. The companies and courts (since these types of union contract matters typically wind up in court, especially in the case of bankruptcy) would be well-served to index some or all of these benefits somehow to the health of the company, whether that's profits or stock price for a publicly traded company or some other factor. The unions would be dead-set against it since they prefer the defined benefit/guaranteed payment outcome no matter what, but how may companies have gone under due to the crushing weight of their union wage/insurance/pension obligations?

[kbvette]

                       Before you villainies unions                                                                             http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/

[dug]

Like I said, there is fault on both sides but the world changes and if a business can't change for whatever reason then it suffers.  Lack of flexibility on the management or union side makes them less competitive.  So it sucks all these people lost their jobs but that is free markets and capitalism. - someone else will step up and take their share of the market so those jobs will be someplace else now.

As an aside, it is pretty easy to villianize unions since they are a government sanction labor monopoly, and all monopolies are bad right.  I mean if a business monopoly is bad because it restricts your choice then surely a labor monopoly is bad when it restricts your choice too?

[SpineyNorman]

It's not "lack of flexibility" It is a Hedge Fund that Romneized Hostess, loaded it down with debt and then demanded union concessions, and the union has had enough. Good for them, shut it down, Twinkies suck now anyway. 

[dug]

I'm going to steal this from a post on fark.com

Anticipated reactions:
Right wing: Unions kill jobs!
Left wing: Hedge Funds kill jobs!
Impacted workers: fark
Everyone else: Meh, there is other junk food available

With that being said, the truth is usually somewhere in the middle.  Issues with long-term liabilities, mismanagement, competition, etc. all played their part. 
http://articles.philly.com/2012-11-14/business/35088944_1_hostess-brands-bakery-union-grain-millers-international-union

"A plan orchestrated by private-equity firm Ripplewood Holdings and hedge funds led by Silver Point Capital and Monarch Alternative Capital brought Hostess out of a previous bankruptcy in early 2009 with $670 million in debt.

Losses continued, and the company went back into bankruptcy in January with $861 million in debt. Hostess' equity owners, the largest being Ripplewood, stand to lose 100 percent of the equity investments in a plan submitted to the court last month."

[kbvette]

                         Are you guys "morphing" into centrists?  Come on in......the waters fine!

[dug]

No offense, but I put you about as much of a centrist as Marx.  But hey, if you're a centrist then you do disagree with labor monopolies, right?  Both sides of the business agreement are free to choose - it seems to be a very center position with no favoritism for either the business or labor. 

[kbvette]

No offense, but I put you about as much of a centrist as Marx.  But hey, if you're a centrist then you do disagree with labor monopolies, right?  Both sides of the business agreement are free to choose - it seems to be a very center position with no favoritism for either the business or labor.

                         Marxist ? please explain

[dug]

Once again, you answer a question with a question rather than just give your position.   Many democrats, and specifically Obama, have stated repeatedly that when you have too much money it should be confiscated and given to someone else.  Your love of Obama and government control of economics are why I say you are not a centrist. 

I have no problem saying I'm a libertarian and think everyone should be free to make their own choices with both social and economic issues: get government out of our bedrooms and wallets.  All of my positions will stem from that basic philosophy.  Taxes should be used to pay for the constitutional functions of government and nothing else.  No corporate crony capitalism, no income redistribution, and no forced participation in programs.  Let people choose for themselves.     

So state your case and prove me wrong. 

[kbvette]

Once again, you answer a question with a question rather than just give your position.   Many democrats, and specifically Obama, have stated repeatedly that when you have too much money it should be confiscated and given to someone else.  Your love of Obama and government control of economics are why I say you are not a centrist. 

I have no problem saying I'm a libertarian and think everyone should be free to make their own choices with both social and economic issues: get government out of our bedrooms and wallets.  All of my positions will stem from that basic philosophy.  Taxes should be used to pay for the constitutional functions of government and nothing else.  No corporate crony capitalism, no income redistribution, and no forced participation in programs.  Let people choose for themselves.     

So state your case and prove me wrong.

                     You inferred that my political views were MARXIST..... since you know so much about me, explain your comment.
If you can't....just say you can't, nothing personal.    

[dug]

I also said you are no centrist and said why but you ignored that part.  You said you are, so prove me wrong.  If you really believe in your political position then you should have no problem stating them, both to prove me wrong and to win people to your side.